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There’s a lot going on (understatement of the decade?) but with the slim incoming Democratic Senate majority, this week we’re talking reconciliation.
TL;DR: Reconciliation is a process Congress can use to pass any legislation covering subjects like taxes, spending and the debt ceiling with a simple majority. Because Democrats have 51 votes (50 Senators + Vice-President-Elect Harris who will cast deciding votes in the event of a tie) in the Senate, reconciliation allows Democrats to pass sweeping financial legislation without Republicans being able to kill the legislation with the filibuster. As an added delicious tidbit, reconciliation bills will almost certainly have to go through the Budget Committee, chaired by none other than Senator Bernie Sanders. (There’s just something poetic about that, don’t you think?)
Okay. Let’s dig in.
Reconciliation — just what is this odd-sounding Congressional process and why is it going to be so important?
A little history. For 42 of the last 50 years, we have had a Republican President, House or Senate (or combinations thereof). Of the eight years Democrats had unified control, six of them were the first two years of a new Democratic administration.
Furthermore, finding mid-level political appointees (those who really implement an administration’s agenda) with prior experience in government was made more difficult for Carter, Clinton and Obama due to the fact that each followed eight (Obama and Carter) or twelve (Clinton) years of Republican control of the White House.
On top of those administrative impediments, Carter and Obama were hamstrung by macro-economic issues from day one (Carter inherited stagflation, Obama inherited the Great Recession); only Clinton inherited a not-horrible economic environment and by the time he left office, we had a budget surplus and were starting to pay down the massive new debt Reagan had accumulated.
While Joe Biden is now a first-term President, unlike Carter, Clinton and Obama, he is no novice to the White House, having spent eight years as a heavily engaged Vice President.
Furthermore, he takes over after only a single Republican term, giving him a deep bench of people with recent experience from which to fill the sub- and sub-sub-cabinet positions that will implement policy.
While he, too, inherits an economy in shambles from a President who ran up record setting new debts, he (and most of his economic team) lived through Bush’s Great Recession and saw, first hand, what of the measures implemented to address it worked … and what did not.
This puts Biden in a strong position to take advantage of the opportunity provided by Democratic control of the White House, House and Senate, which finally brings us back to our topic for the post: Reconciliation.
Reconciliation, in a nutshell, is a legislative process created back in 1974 to avoid the Senate filibuster when it comes to almost all tax, spending and debt ceiling legislation. Congress wanted to ensure that, at the end of the day, the minority party in the Senate could not use a filibuster to shut down the government or cause a default on the public debt.
(A reminder that the “filibuster” allows a 41 vote minority to keep the Senate from moving to a substantive vote on a bill. Historically, members had to “talk a bill to death” by taking the floor and holding it until dropping from exhaustion or until a “cloture” vote – which requires 60 votes – ended the debate. Today we don’t require the physical exercise of taking the floor, but the cloture vote is still critical – and is why conversations about filibusters often center on the number 60.)
The reconciliation process is a little arcane, but has five basic steps in most cases:
1) Congress adopts a Budget Resolution. This is not a law and does not go to the President for signature. It is internal guidance from Congress to various committees about the parameters for fiscal policies. Importantly, Budget Resolutions are not subject to filibuster in the Senate, so require only a simple majority to pass.
2) Various committees in each chamber draft up specific provisions to fulfill the requirements of the Budget Resolution; so long as their initiatives fit within the limits imposed by the Resolution, they are measures designed to “reconcile” spending realities with the budget resolution (hence the name of the process).
3) If more than one committee is involved (which is almost always going to be the case), the plans of the various committees of each chamber are then sent to their respective Budget committee for integration into a single omnibus Reconciliation Bill. (It is this step in the process that gives Bernie Sanders, as chair of the Senate Budget committee, such a powerful role in this process. Even so, don’t expect him to push too far left as the vote of every Democrat – including moderate/conservative Democrats like West Virginia Senator Joe Manchin and Arizona Senator Kyrsten Sinema – is going to be required to adopt provisions the GOP universally opposes.) In the Senate, the vote on this omnibus Reconciliation bill requires only a simple majority.
4) Each chamber votes on its version of a Reconciliation bill. If the text is identical (it almost never is), then it is sent to the President; otherwise the House and Senate work out their differences in a “Conference Committee” and that compromise version goes back to the House and Senate for an up/down vote. Importantly, in the Senate, these votes require only a simple majority (50 Senators + the VP) to pass.
5) The President receives the final version for signature.
Reconciliation is an incredibly powerful tool for handling anything to do with taxes, spending, and the debt ceiling. By way of example, it’s the process the GOP used to pass Trump’s tax giveaway and to attempt to gut the ACA (Obamacare).
Reconciliation means that the Democrats will be able to adopt most every aspect of Covid relief, economic stimulus, and changes to the tax code (repealing Trump and even Bush tax giveaways) without needing a single GOP vote. Of course, in the Senate, it also means that they will need every single Democratic vote and this means the more progressive and less progressive wings will have to agree.
With Bernie Sanders in charge of the Budget committee, it is unlikely anything will make it to the floor that he and other further left Senators are not willing to support. And, as a practical matter, it is extremely unlikely that a provision to which conservative Democrats like Senators Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) would object would garner the support of moderate-ish Republican Senators like Susan Collins (R-ME) or Lisa Murkowski (R-AK).
So… as a practical matter, we’re going to end up with compromises between Sanders/Warren and Manchin/Sinema in all of these areas. The good news is that they are all pretty darn reasonable people who understand the horsetrading that goes into getting things passed and Sanders’ position at the top of the Budget committee means that he’ll likely win most of the “ties.”
While Bernie is uncompromising in his rhetoric and goals, he is extremely practical when it comes to legislating, so while negotiation may take time, he, with Schumer and Biden helping to broker deals, will likely be able to find something he can agree on with Manchin/Sinema.
One final reminder on the limitations of Reconciliation. While it is a powerful tool that will allow for a lot of good fiscal policy changes, it is limited to bills covering taxes, spending and the debt ceiling. It can not, for example, be used to pass the John Lewis Voting Rights Act, or make DC or Puerto Rico a state.
Look for substantial economic relief, a massive infrastructure bill, and potentially some substantial increases in taxation on corporations and those earning more than $400k/year. We will not see all societal ills fixed using this tool and, unless and until there are 50 votes to end the filibuster in the Senate, McConnell and the GOP will have a strong voice in non-fiscal policy.
It will take time to build the case for the end of the filibuster, and our hope is that the filibuster for legislation will be eliminated by the end of 2021. Until then, Reconciliation is going to be the only way to make policy without Mitch McConnell cooperation.
The Sedition Caucus
But, we hear you saying, what about those eight senators and 139 representatives who voted to overturn the 2020 elections? What are we doing about those guys?
Those members tried to install “their” president by disenfranchising millions of Americans – and in doing so spread the Big Lie that caused an insurrection and five people’s deaths. They should not be in Congress. But, until and unless they’re removed, we need to start doing the work NOW to make sure this is their last term.
Our Sedition Caucus project makes that easy for you. With it, you’re directly supporting the next Democratic challengers of each of the 147 Senators and Representatives that chose ambition over democracy. Your support will go to the campaigns of the Democratic challengers.
We may not know who those challengers will be yet, but we know they’ll need our support.
You should join us now, and help spread the word!
Jonathan Zucker & Michele Hornish